January 18, 2018
Offshore Drilling in an Era of Energy Abundance
By Ellen Scholl
This article is part of a series that reflects on the first year of the Trump administration.In the first year of his administration, US President Donald J. Trump pursued what he called an “America First” energy strategy, seeking to maximize domestic production of oil and gas resources by rolling back regulations, lifting restrictions, and opening additional land up for development.
What was US policy prior to Trump? In the closing days of his administration, former US President Barack Obama announced what was intended to be a permanent ban on offshore oil and gas drilling in the Arctic. Given the fragility of Arctic ecosystems and the operational risks of drilling in such a harsh environment, he withdrew the Chukchi Sea and most of the Beaufort Sea from oil and gas leasing, exploration, and development.
In the wake of US President Donald J. Trump’s election, the December 2016 Statement by the President on Actions in the Arctic and Atlantic Oceans announced it was “designating the bulk of our Arctic water and certain areas in the Atlantic Ocean as indefinitely off limits to future oil and gas leasing.” This measure built upon previous actions taken by the Obama administration to protect areas in the Northern Bering Sea and Bristol Bay based on their natural beauty and the importance of their fisheries.
The move, which drew on authority in the 1953 Outer Continental Shelf Lands Act, was unprecedented. No previous president had instituted a permanent ban on drilling.
What has Trump said and done? During his 2016 presidential campaign, Trump promised to unleash domestic energy production, highlighting the potential of offshore areas. In just under one hundred days in office, Trump signed Executive Order 13795: Implementing an America-First Offshore Energy Strategy. This legislation reversed the Obama administration ban on leasing offshore drilling blocks in the Arctic and outlined his intentions to increase offshore exploration and production.
“Our country is blessed with incredible natural resources, including abundant offshore oil and natural gas reserves. But the federal government has kept 94 percent of these offshore areas closed for exploration and production. And when they say closed, they mean closed. This deprives our country of potentially thousands and thousands of jobs and billions of dollars in wealth. I pledged to take action, and today I am keeping that promise”
- Remarks by US President Donald J. Trump at Signing of Executive Order on an America-First Offshore Energy Strategy, April 28, 2017.
What has changed? Not much yet, but the Department of Interior’s draft plan certainly proposes to shake things up.
The January 2018 release of the US Department of Interior’s draft five-year leasing plan, the Outer Continental Shelf Oil and Gas Leasing Program for 2019-2024, has caused quite a stir in the energy world and along the coasts. The draft proposal would include lease sales of forty-seven new blocks in twenty-five planned areas out to 2024, the largest potential sale ever, covering 90 percent of the Outer Continental Shelf.
Under the proposal, previously protected parts of the Arctic, Atlantic, and Pacific oceans would be opened up to oil and gas development, potentially enabling new exploration and production from the Florida Keys to Maine and in areas along the west coast that have not seen drilling in decades. While still in draft form, the plan has drawn opposition not just from environmental advocates, but state governors up and down the Atlantic, including Florida, South Carolina, North Carolina, Virginia, Maryland, Delaware, New York, Rhode Island, New Hampshire, and Massachusetts, and from all three Pacific coast states.
Just five days after the plan was announced, US Secretary of the Interior Ryan Zinke said Florida would be exempt, leading other states to call for the same. As the draft plan is still in the public comment period, Zinke has been criticized for making such an announcement before the sixty day public comment period had closed, and even before the required consultation process with affected states and the public meetings to take place around the country have even begun. Federal law stipulates that local views are one of eight factors that must be considered during the development of leasing plans.
More acreage also does not necessarily mean more production, as continued low oil prices present another headwind to potential development. Additionally, Shell walked away from a multi-year, multi-billion-dollar effort to drill in the Chuchki Sea during the Obama administration, in a potential cautionary tale for the challenges of drilling in some of the more inhospitable offshore areas.
Ellen Scholl is deputy director of the Atlantic Council’s Global Energy Center. You can follow her on Twitter @EllenScholl.